What is the test for damages arising out of a breach of fiduciary duty?

The second position dealing with the measure of damages arising out of a breach of fiduciary duty is that of Hodgkinson v. Simms. In that case the defendant was in a conflict of interest as between the plaintiff and a company that specialized in residential building schemes. The defendant did not disclose his relationship to the company prior to securing the plaintiff's investment into that company. In the result the residential housing market collapsed and though the tax liability of the plaintiff was reduced his investment was substantially lost. LaForest J. held the defendant liable for a breach of fiduciary duty and responsible for all investment losses, even the losses over which he exercised no control.

The absence of causation of some of the losses did not reduce the defendant's liability given the finding of a material inducement on the facts of Hodgkinson v. Simms. Further, the result was also grounded on the fact that the particular fiduciary breach catalyzed the chain of events that lead to the investor's loss. The equitable duty breached was directly related to the risk that materialized and in fact caused the plaintiff's loss. The strong nexus between the duty and the later actualized risk grounded the court's decision that it was right and just that the defendant account for the plaintiff's loss in full.